Basic Differences between Preferred and Common Stock
April 11, 2010 // Posted by: qwcdirect // Category: Finance, Investments
There are two types of stocks that companies offer and they have varying financial terms in the rights. Common stock-holders benefit in two main ways and these are in the appreciation of capital and the appreciation of dividends. However, common stocks have some disadvantages like when dealing with dividends in that their payments are not stable and uniform and it is not guaranteed to get payments on dividends. Another difference that the common stock and the preferred stocks have is that with the common stocks, the holders can vote if there is anything that has arisen in the company at the same time they vote if there is an election for the leadership of the company.
On the other hand, preferred stocks are more stable investment in terms of dividend payments because it is a guarantee that you get payment in your dividends regardless of the amount that the stock is sold in the market.